The average has fallen 9 percent since the beginning of this year. Applications are a proxy for layoffs, so the declines indicate that companies are cutting fewer jobs.

The figures come a day after the government said the economy shrank at a 2.9 percent annual rate in the first three months of the year, the worst reading since early 2009, when the U.S. was mired in the depths of the recession.

The number of people actually receiving benefits inched up by 12,000 to 2.57 million. But the small increase comes after the level fell to a six-year low in the previous week.

When businesses are confident enough to keep staff, they are also likely to hire more people.

The low level of applications indicates employers haven't been rattled by the first quarter's dismal showing, which many economists have partly blamed on bad weather. If businesses feared the economy was tumbling into a recession, they would likely ramp up layoffs.

Instead, they are hiring at a healthy pace. Employers added 217,000 jobs in May, the fourth straight month of gains above 200,000. That's the first such stretch since 1999. The unemployment rate remained 6.3 percent in May, the lowest in more than five years.

Other data also suggest the economy has recovered from the bad first quarter. Factory output is rising, auto sales have reached a nine-year high and businesses are ordering more equipment.

Most analysts forecast the economy will expand at a 3.5 percent annual rate or higher in the April-June quarter, and at a 3 percent rate in the second half of the year.